What Drivers Need to Know About Auto Repair Financing

For many people, having a reliable vehicle is essential to success at a job, transporting kids to school, and living independently every day. However, if your car breaks down or is involved in an accident, unexpected car repairs can really stretch your budget.

This Tower Loan guide covers car repair financing options and how to handle the stress of unexpected repairs when you’re short on cash.

Assess the Damage and Get an Estimate in Writing

Before you commit to repairs, it’s smart to get multiple quotes from different mechanics. You can ask about pricing before taking your car to the shop and requesting an estimate in writing. Different mechanics have different rates, so you can find a better deal or negotiate once you understand the going rate for services.

Fast Ways to Get Vehicle Repair Financing

If you can’t wait another day without a vehicle, here are some quick ways to make auto repair financing work.

Use Your Emergency Savings Account

Ideally, you have a separate savings account that you only use for emergencies. This is a great way to finance car repairs because you’ll accrue zero interest. If you don’t already have an account like this, consider this motivation to start an emergency fund once you’ve handled your car repairs.

Apply for a Personal Loan

Personal loans, like the ones we offer at Tower Loan, are excellent options for people with decent credit who want predictable repayment terms. When you take out a personal loan with us, you’ll pay back your car repair funds in affordable monthly installments with fixed interest rates and repayment terms.

You can apply online for a Tower Loan personal loan or compare rates at banks and credit unions.

Use a Credit Card

If you use a credit card wisely for auto repair financing, this could be a short-term strategy. Look for 0% introductory APR credit cards, and pay your balance off as quickly as possible to avoid long-term interest accruals.

Request a Payment Plan from Your Mechanic

Some auto shops may offer payment plans, so it’s worth asking if this is possible. If your mechanic seems open to the idea, provide an upfront deposit to show you’re a responsible customer.

Borrow Money from Friends or Family

If you can borrow money from a loved one without damaging your relationship, this could be an option for vehicle repair financing. Be honest and transparent about the money you need and the reason for the repair. Establish a clear repayment timeline in writing so that you are both on the same page.

Use a Buy Now, Pay Later App

Some auto service providers and third-party apps offer buy now, pay later services. Look for no-interest and short-term repayment options. However, be aware of any hidden fees or penalties for missed payments.

Other Creative Options to Consider to Finance Car Repairs

If you’re still uncertain about financing for auto repairs, consider getting creative with these additional options.

Sell Your Possessions or Pick Up Side Gigs

You could pick up a side gig to get quick cash if your regular job income isn’t enough to cover unexpected auto repairs. For example, you can make money quickly by landscaping or housecleaning through TaskRabbit, driving for Uber, or selling items on Facebook Marketplace. Look around your home for high-value, underused items you are willing to sell.

Seek Nonprofit or Government Assistance

Depending on where you live, community programs may be available to assist low-income individuals needing essential vehicle repairs. You can search locally via 211.org, the United Way, and local churches and charities.

Look Into Vehicle Repair Financing Programs

Some auto shops and third-party lenders offer auto repair financing programs to help pay for repairs. These programs are often easy to access and provide quick approvals. However, you may face high interest rates and short repayment periods for those benefits.

Auto Repair Financing Options to Avoid

Avoid the following options as much as possible when considering the option to finance car repairs.

Payday Loans

Avoid payday loans with extremely high interest rates of up to 400% APR or more. When you take out these types of high-risk loans, you risk getting trapped in a cycle of debt.

Car Title Loans

You need your vehicle, so don’t risk it more than absolutely necessary. Avoid car title loans so you don’t risk losing your car entirely. Approximately one in five people who take out car title loans lose their cars to repossession.

What If the Damage Is Too Expensive to Repair?

At some point, it may become necessary to compare the cost of your vehicle repair to your car’s value. If it’s not worth the money to repair it, car repair financing may not be the best option. Instead, you could sell your car as-is, trade it in at a dealership, or finance a replacement car at a lower cost than the repairs.

Final Tips Before You Finance Car Repairs

Auto repair financing is an option, but it’s crucial to understand the risks and benefits before you finance car repairs. The essential things to remember are to get multiple detailed repair estimates and then compare interest rates and terms before taking out a loan.

Check for prequalification options to avoid a hit on your credit score, and only borrow what you can reasonably repay for auto repair financing.

To learn more about our personal loans for car repairs, please visit your local Tower Loan branch or apply online today.